By Tiernan Ray

Goldman Sachs’s Bill Shope, who has a Buy rating on shares of Apple (AAPL), and a $500 price target, this morning writes that investor conversations suggest to him some parities are increasingly worried about not having the rise in the stock in their portfolios given a surge of 12% since April 23rd, when the company announced a doubling of its capital return program.

Writes Shope, that boost in dividends and buyback to record levels was the proximate cause of the run, but a piling on by investors may now be driving shares, despite a sharp rise in Apple short interest as well:

We’re now seeing the beginnings of “the fear trade” on Apple. With Apple’s share price rebounding heftily since it reported earnings on April 23rd, our conversations with investors this week suggest that many are starting to worry they may be underexposed to a continued near-term rally in the name. This dynamic is interesting in that it’s the reverse of the process we saw in late 2012, where investors were trimming as the stock continued to sell off aggressively. In both cases, the common refrain from investors was “am I missing something.” As we noted in last week’s report, we believe the stock’s rebound was partially driven by a delayed reaction to Apple’s surprisingly large capital allocation program and the fact that consensus has come down enough to narrow the risk of an earnings shortfall this summer. We have also assumed that both of these factors removed many of the negative catalysts that could have attracted incremental shorts, and of course that potentially exacerbated the rally. On that front, however, we were surprised to see that the April 30th short interest data (released May 9th) shows that Apple’s short interest increased by 107.2% over a 2 week period. While we still believe the company needs to have a hit product cycle to drive a meaningful share price recovery this year, the shorter- term downside risk certainly appears to be less severe than many had previously feared.

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There are 14 comments

MAY 10, 2013 12:51 P.M.

Anonymous wrote:

wow. Bill just woke up to that analysis, huh? why do they pay some of these guys?

MAY 10, 2013 1:03 P.M.

Market Mayhem wrote:

Apple's share rise in unsustainable due to the fact that Samsung is stealing Apple's mobile empire right from under its nose. Samsung is a smartphone-making machine while Apple is like a dusty, old world company, hand-building one smartphone at a time. Tim Cook telling investors, "We don't sell smartphones until they're ready" leaves a large time gap where Apple isn't doing anything. When a company has an lax attitude like that, investors might as well go anywhere else to make some money.

While Apple is sitting around with idle hands, Samsung is producing smartphones 24/7 and growing inventory at enormous rates. It's hard to believe that Apple had an advantage in the smartphone business a little over a year ago, but is basically throwing away its lead. Samsung has set out to destroy Apple smartphone business but I'm not even sure Tim Cook is aware of this. I suppose Tim Cook and crew and too preoccupied trying to put some value into Apple stock. All Apple would have had to do was lower the cost of older iPhones and start selling them to BRIC nations in order to increase market share.

Now Apple is bleeding market share like a stuck pig. By the time September rolls around it will probably lose half the market share it had six months ago. Samsung has now gotten a lock on the mobile industry and isn't going to give any of it back. Apple is always getting back-stabbed by by former partners and never attempts to retaliate. Buybacks and dividends are not going to be enough to get Apple's stock back on track. Apple is now losing market share, mind share and profits to Samsung. I don't see how Apple can keep making excuses to shareholders.

MAY 10, 2013 1:10 P.M.

Anonymous wrote:

Check out Bill Shope ranking on TipRanks. he has an impression 68% success ratio on BUY recommendations and a very high average return on stocks he recommended. ranked in total 24 out of 1940 analysts.http://tipranks.com

MAY 10, 2013 3:11 P.M.

Samsung's Nightmare wrote:

With a significant improvement in iOS7 coming shortly and a release most likely within 12 months of a larger screen and premium iPhone (I will upgrade from my iPhone 5), we will see the beginning of the end of the popularity of the Android/Samsung devices and very possibly (by the end of 2014) the relegation of Samsung as the leading player only in the lower-end, lower-profitability, gimmicky and commodity segment of the smartphones market.

All this talk about Samsung/Androids having caught up with Apple devices and "ecosystem" in particular is utter and complete nonsense, and wishful thinking. (Note: Samsung does not even control the software side of things and is scrambling to offset Google's coming onslaught via Motorola with an alternative and mediocre offering still on the drawing board.) As the prominent venture capitalist Roger McNamee said recently: “There is nothing wrong with Android as a product except that it does not do much. It is the equivalent of having a motor scooter at the Indianapolis 500.” I completely agree.

With the Samsun's Galaxy S4 providing only an "incremental" improvement over the GS3, Samsung is realizing that differentiation is becoming harder by the day. With Tim Cook remaining mum about what he plans to do next, Samsung is finding that opportunities in "copycatism" are becoming harder and harder by the day.

MAY 10, 2013 3:15 P.M.

mayhem..? wrote:

@Market Mayhem. "While Apple is sitting around with idle hands" - really, have you seen the R&D spending for the las few years..up nearly 40% in 2012? Hardly idle. "Now Apple is bleeding market share" - Apple market share continues to grow YOY according all the data i have seen.
“We don’t sell smartphones until they’re ready” leaves a large time gap where Apple isn’t doing anything" - Exactly.thats why the have the most loyal customers; they know there are buying a quality product.
"Apple is now losing market share, mind share and profits to Samsung." - Apple takes almost 60% of the profits in the smart phone market..

Apple seems to be in a great position with fiercely loyal customers. ...however Samsung has the risk that any of the other numerous Andriod makers could release a phone that takes off their Galaxy models did. Remember it wasn't long ago that HTC was the Andriod king. Most likely over the next few years you will see just that..3 or 4 Andriod makers splitting about 1/2 of the smart phone profits while Apple banks the other half. Add that with their profits from iPod, Computer, content, and peripherals, and whatever other new products they will eventually release and you got a pretty compelling investment opportunity.

MAY 10, 2013 4:12 P.M.

Paulo Lin wrote:

You poor Apple minions, you obviously haven't used Android? Unfortunately for you, you are wrong, Apple will come up with nothing special with iOS 7 since they will once again be behind the times. iOS 6 is so inflexible yet you imagine that this will change with iOS7? The younger generation that have some tech knowledge will not go for the iphone since there is restriction after restriction starting with iTunes garbage. Android is a flexible and powerful OS and that's what people want unless your 40+ years old. People that love their iPhones are the users that switched from their old BB, that's where Apple took the market share. Apple will only continue to lose market share to Android. What you fail to realize is that Google is a software innovator, example Google Translate, Google Now which destroys SIRI. Apple tries to keep up in the software department however they can't and are always 1 step behind Google. Just came back from New York City and basically no iPhones to be seen just many many Samsung Note 2s. Things are changing and people want change not restriction which is what Apple and their "Ecosystem" offers.

MAY 10, 2013 6:10 P.M.

Paulo Lin wrote:

Oh and I forgot to mention, if you think that all that counts is image and hardware hardness or casing, wrong! People don't care because the iphone will crack just as easily as the plastic phones. The difference is the plastic phones are much better overall than the iphone. If you want to compare exterior and interior quality, what about the new HTC One aluminum case and amazing Andoid Jelly Bean inside, it blows the outdated and boring iphone to bits, inside and out!

MAY 10, 2013 11:36 P.M.

@ Paulo Lin wrote:

Q: If you could be any insect. What would it be? I want you to think about that. It's important. And is it any coincidence that the head looks like Samsung's chairman?

MAY 10, 2013 11:40 P.M.

@ Paulo Lin wrote:

Keep up the good work. Android salutes you!

Eric S.

MAY 11, 2013 2:57 A.M.

Samsung's nightmare's nightmare wrote:

Whether there will be an improvement in iOS 7 is yet to be seen, it could just be like the change from iPhone4 to iPhone4s - minute and disappointing.Twelve months is a long time, remember what Apple stock was 12 months ago? Apple's market share has saturated and will cease to grow as its "cool factor" wanes. Android is here to stay and has only grown stronger. Key Lime Pie will also get released soon and Apple is now playing catch up with Android. Why are people purchasing something from a company they know is ripping them off? It's clear that Apple has high margins, where do you think the margins are coming from? Android has not only caught up but has already surpassed Apple in the mobile OS space, as demonstrated by their global market share and Apple will never catch up unless they step it up in the innovations department. Unlike Apple's walled garden approach to operating systems, Android is open source, the development community owns it, not a single company. Tim cook has been quiet and is remaining mum because Apple has no more tricks up its sleeve, it's a tech company, it's supposed to be about innovation, and what does Cook do with the money that's supposed to be invested in R&D and further development? Pays a dividend? That's just grasping at straws to get market share back, which, did pretty much nothing. Apple is a company riding on its past glory and unless it creates a new product or somehow do its magic with marketing to rip off (you said it, high profit margins) unsuspecting consumers, history will replay and it will lose the mobile war just like it did to MS in the computer OS war.

One last thing, how dare an iSheep desecrate the late Steve Jobs by suggesting an iPhone with a larger screen? Jobs said 3.5 inches is the perfect size.

MAY 11, 2013 8:35 A.M.

@ Ssmsung's nightmare aka Paulo Lin wrote:

Dear Shmuck Face.

You should get some professional attention. You really should. Then you could have a life. Nobody in their right mind is that much of a Samsung fanatic as you and also anti Apple. Hmm. Then again. You could just be a really big and stupid moron with a little penis who can't get laid. Which is it? Both? Professional help will help you. Trust us.

MAY 11, 2013 10:24 A.M.

Paulo Lin wrote:

@Idiot - Obviously your a loser, what word do you see "Android" that's right, now get that in you minute size mind that is brainwashed, think Android, Android, Android, yes Android. Samsung, HTC, etc are just hardware companies, Android, yes Android is taking over CrApple mobile. CrApple is down from $700 when the amazing iOS6 and iPhone 5 was announced, CrApple has nothing better to offer. So stick your dumb comments up your tiny brain which is located behind you and between your legs since your comments are useless

MAY 11, 2013 2:01 P.M.

Cupertinite wrote:

It's not about the next iPhone. It's about the nest BIG THING that disrupts the marketplace as the iPhone did to the smartphone market. Apple has never been about commodities, it's been about innovation. When you jump the market by 3-4 years, you get your market share anyway.

MAY 13, 2013 12:13 P.M.

Just Facts wrote:

Anyone who thinks Samsung is fan of android is mistaken, they are not. They are not competing with apple, they already have the crown compared to any manufacturer. They are technology innovators hardware manufacturers. Apple still depends on them in terms of high quality, high volume hardware production. Apple have to outsource manufacturing period. The most unnecessary argument is whether apple or Samsung has the highest quality product finish (plastic versus metal conversation.) It is really laughable. Unless Apple establishes production plants in USA and manufactures its own hardware and totally cuts its dependency to Asian countries they are not complete. Every single apple product sold Samsung makes money. Every single Samsung product is sold apple makes 0 dollar. Apple is the crybaby of the industry that feeds off others inventions and innovations. The reason they are trying to establish a false perception as if they are the actual “innovators” is simply a distraction technique they have been pulling for decades unsuccessfully by suing companies around them who become successful (such as Microsoft and Samsung), they also inspired parasitic patent trolls to leach on start-ups, developers and even end users. Their success depends on ability to gather bits and pieces of other companies innovations and putting them together and call it as theirs (Xerox) They feed on uneducated consumer’s interest in new technology and do best they can to cripple their ability to question what’s good for them and lock them into their closed source operating environment providing nothing more than a average technology experience. When IOS was jailbroken Apple complained that it would cripple cellular towers. The company’s filing explained that jailbreaking could allow hackers to altering the iPhone’s BBP — the “baseband processor” software, which enables a connection to cell phone towers. They filed a 45 page complaint with library of congress copyright office in 5/8/09. 4 years have passed nothing has happened. Scare tactics unfortunately didn't work for their self serving corporate interests. World is for humans and for other living organisms not for selfish monopolistic leeches. Open source software will win therefore Apple will lose. When all manipulated misinformed people wake up they will see how they have been milked by Apple. When that time come we all know it is freedom.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.